If you’re a multifamily real estate investor, the Section 8 program should be of particular interest to you. In this guide, you’ll learn everything you need to know about this program.
Defining Section 8 in Multi-Family Real Estate
As the largest federal American subsidized housing program, the HUD Section 8 Program is designed to offer financial assistance to over 5 million households around the US. While it was first authorized in 1974 by the Housing and Community Development Act, the program is now managed by the US Department of Housing and Urban Development (HUD). The assistance is in the form of regular rental payments from the government and there’s also a ready supply of tenants waiting to fill vacancies. The Section 8 program provides you options:
Housing Choice Voucher Program
Also known as voucher-based assistance, the Housing Choice Voucher Program allows tenants to decide where they live.
Project-Based Voucher Program
Also called project-based assistance, the Project-Based Voucher program is attached to a specific building or unit, which means tenants cannot carry rental assistance to where they relocate. The assistance stays with the unit.
Why Should You Become a Section 8 Landlord?
There are several reasons why so many residential real estate owners offer their vacant properties through the Section 8 program. Some of them include:
Regular Payments from the Government
If your rental property is located in a low-income area, collecting rent payment from tenants can become a hassle. Depending on the specific program and the income levels of tenants, however, the US government pays Section 8 landlords either 70% or 100% of tenants’ rent. On top of that, the authorities grant a 5% to 8% rent increase every year.
No Vacancy Issues
The Section 8 program provides landlords with a waiting list of tenants, so that their apartment communities remain occupied at all times. The waiting is quite long, so if a particular tenant shows lack of interest in your property, you still have plenty of other prospects who’re excited to check out your property. With no vacancy concerns, the Section 8 landlords also don’t need to spend on marketing their properties. Their zero marketing costs often give them a competitive edge in the market.
Lower Capital Expenditures
In normal circumstances, you need to invest in expensive upgrades such as new flooring, fancy landscaping, and new appliances to attract reliable tenants for your apartment buildings. This isn’t the case when you’re a Section 8 landlord because the program brings tenants to you rather than you finding tenants. This way, you’re able to keep your capital expenditures to a minimum.
Multi-Family Real Estate In NYC
By now, you should have obtained a profound understanding of the Section 8 program in multi-family real estate, including what benefits it offers to landlords. To find out how to apply for the program and get your properties listed, you’ll need to conduct more research.
While the aforementioned insights can help if you already possess real estate units, if you’re still looking for multi-family apartment availabilities, contact the leasing team at Milbrook Properties today.